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Why Are Cadillac Sales Growing In China?

Why Are Cadillac Sales Growing In China?

The fact that Cadillac is booming in China is well-known. The brand’s Chinese domestic sales jumped 45.9 percent to 116,406 units during the 2016 calendar year, as the marque’s only market to grow during the year. The trajectory isn’t slowing: during the first eight months of 2016, the luxury brand posted a 66.5 percent sales growth in China. Suffice to say, Cadillac is hot in the Land of the Red Dragon. But the reason for said growth is just as pertinent.

Cadillac Sales Results - August 2017 - By Market

MarketAugust 2017 / August 2016August 2017August 2016YTD 2016 / YTD 2015YTD 2017YTD 2016
Total+13.5%32,08428,256+21.6%221,566182,212
United States-8.1%15,01616,346-5.4%98,316103,918
China+51.4%15,0149,914+66.5%107,37764,489
Canada+9.9%1,2751,160+18.9%8,9057,487
ROW-6.8%779836+10.3%6,9686,318

The primary reason for Cadillac’s growth in the world’s biggest automotive market is actually quite simple: Cadillacs have become much more affordable in China.

Since the 2012-2014 timeframe, prices on new Cadillac models have have roughly 30 percent, according to an analysis performed by GM Authority. That pricing decrease is the result of a strategic undertaking by Cadillac parent company, General Motors, that started as far back as the 2012-2013 timeframe to produce Cadillacs locally in China, rather than importing them from elsewhere. With the exception of one model (the Escalade), all Caddys sold in China are made there.

That’s a significant departure from the 2010-2014 period, when one model (the STS-based Cadillac SLS) was made locally in China, while the remaining vehicles in the lineup were imported from North America, resulting in a hefty import tariff being placed on the cars, thereby pricing them out of reach for the vast majority of China’s luxury car shoppers.

As of this writing, Cadillac’s Chinese lineup consists of five vehicles:

  • CT6/CT6 PHEV: produced at the new Cadillac China plant (Cadillac Jinqiao)
  • XT5: produced at the new Cadillac China plant (Cadillac Jinqiao)
  • XTS: produced at GM China Shenyang Norsom plant
  • ATS-L: produced at GM China Shenyang Norsom plant
  • Escalade: imported from the GM Arlington factory in Texas, USA

So, Cadillac is finally seeing commercial success in China because its vehicles are now priced at a reasonable price range, as a result of local production that has enabled Cadillac to avoid China’s hefty vehicle import taxes that the vehicles were subjected to previously. Add in solid marketing and other well-executed operational items, and you get a formula for growth in the world’s biggest auto market.

Written by
Alex is the founder of Cadillac Society. He has a deep passion for automotive business strategy and enjoys driving his ATS sedan on twisty mountain roads.

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